Elsevier

Energy Policy

Volume 34, Issue 13, September 2006, Pages 1556-1565
Energy Policy

Developing sustainable energy policies for electrical energy conservation in Saudi Arabia

https://doi.org/10.1016/j.enpol.2004.11.013Get rights and content

Abstract

Towards the end of 1998, the Saudi Arabian electricity sector embarked upon a major restructuring program. One of the aims of the program is to achieve sustainable performance. Although progress has been made, a number of challenges remain, including high demand growth, low generation capacity reserve margins, inefficient energy use, absence of time-of-use tariffs, and the need for large capital investments to meet current and future expansion.

Electrical energy consumption in Saudi Arabia increased sharply during the last two decades due to rapid economic development and the absence of energy conservation measures. Peak loads reached nearly 24 GW in 2001—25 times their 1975 level—and are expected to approach 60 GW by 2023. The total investment needed to meet this demand may exceed $90 billion.1 Consequently, there is an urgent need to develop energy conservation policies for sustainable development.

Current sustainable policies, particularly those pertaining to energy conservation, led to peak load savings of more than 871 MW in 2001, mainly as a result of collaborations between the Ministry of Water and Electricity and the Saudi Electricity Company. In the long term, however, unless sustainable energy policies are developed at a national level, such efforts will be largely ineffective. To address this, policies and programs are being developed for public awareness, energy regulation and legislation, and energy information and programming.

If energy conservation is taken into account, the forecast demand can be reduced by 5–10%. This is equivalent to 3–6 GW of additional capacity, which represents a possible $1.5–3.0 billion saving over the next 20 years. Typically, investment in energy efficiency is 1% of utility sales revenues, which for a country like Saudi Arabia could be $15–60 million p.a. If only savings on air conditioning are considered, the return on investment is equivalent to 400–500 MW p.a. of generating capacity—a saving of up to $0.25 billion p.a.

In this paper, the major challenges facing the Saudi electrical power sector in implementing sustainable development are discussed and analyzed. The paper also looks at a number of developed countries and examines their experiences with energy conservation programs. The paper highlights current Saudi programs and experience for promoting awareness and participation in energy conservation. Strategies and major policy measures for energy conservation in Saudi Arabia are proposed.

Introduction

During the last 25 years, Saudi Arabia underwent rapid population growth and economic development, coupled with a rapid increase in electricity demand. Statistical data on the growth of electricity generation and energy demand in Saudi Arabia show a sharp increase in electrical energy consumption with an average annual growth of 14.8% (Table 1). Generating capacity reached 25 843 MW in 2001, equal to 22 times its 1975 level, and generated electric energy reached 134 000 GWh in the year 2001: more than 31 times that generated in 1975 (Annual Report for Ministry of Industry and Electricity, 2001G). The kingdom's peak load in 2001 was 23 582 MW; approximately twenty-seven times greater than in 1975. The number of consumers increased ten-fold during the same period, to about 3.8 million. Fig. 1 shows the annual growth of generating capacity and peak load in Saudi Arabia for the period from 1975 to 2002, and its forecast till 2023. Fig. 2 shows a profile of actual electric generating capacity, peak load, and minimum load in Saudi Arabia for the year 2001.

In the past, as part of its social welfare program, the Saudi government subsidized electric energy prices. This led to very low electric tariffs compared to world standards and actual operating expenses. Scant attention was paid to energy efficiency. The resultant uncontrolled demand for electricity eventually saw peak loads approaching the installed capacity.

In Saudi Arabia, the electrical energy consumption in the residential sector is almost the same as the sum of the other sectors. A percentage breakdown of energy consumption by sector is shown in Fig. 3.

Based on a recently completed planning study by a number of national and international consultants (Electricity Corporation, 2000), peak electric loads will continue to rise, reaching 59 256 MW by the year 2023. An estimated total investment of $90 billion is needed to meet this demand. The only way to mitigate and offset supply side investment is by reducing peak load demand. This could be achieved by developing energy policies that promote conservation measures, in combination with regulations to maintain sustainable development.

It is worthwhile to mention that during the year 2001 approximately 17% from the total electric energy in Saudi Arabia is delivered from desalination plants (equivalent to 22 400 GWh).

Section snippets

Energy conservation measures in other countries

Most developed countries are preparing reforms of their power sectors in order to introduce greater competition, increase efficiency, and lower costs. These countries have government-sponsored agencies that address energy efficiency policies and conduct research studies (Skelton, 1999; Energy Research and Development and Demonstration Expenditure, 1985–2000: an International comparison, 2001; Bailly, 1998).

The degree of government involvement in such programs varies from country to country: the

Organizational framework and electricity sector restructuring in Saudi Arabia

The Ministry of Water and Electricity (MWE) supervises all electricity sector activities in Saudi Arabia and is responsible for overseeing generation and distribution, and for long- and short- term electric energy use planning. The actual generation, transmission, and distribution of electricity is the responsibility of the Saudi Electricity Company (SEC). The SEC, a joint stock company whose majority shareholder is the government, became operational in 2000 under the supervision of the MWE.

Energy conservation efforts in Saudi Arabia

In order to cope with the increased power demand and to ensure reliable electricity supplies, MWE has taken several steps to implement energy conservation and to reduce peak load demand. These include the formation of an Energy Conservation and Awareness Department (Fig. 6), imposing limits to the maximum power that can be delivered to electricity consumers, establishing demand-side management actions, and rationalizing the use of electricity.

The new Energy Conservation and Awareness Department

Challenges facing the electrical energy sector in Saudi Arabia

The Saudi electrical energy sector faces various challenges. The most important of these fall into three groups: technical, financial, and socio-economic. These are collated in Table 3: some of the challenges are in some ways interrelated.

Developing and implementing national conservation policies

The preceding section described some challenges that the electrical energy sector in Saudi Arabia is facing. These formed the basis for formulating the major strategies that need to be implemented. Table 4 shows the strategies, the policy measures used to carry them out, and the relevant implementing bodies.

It is important to realize that future electrical energy will be insufficient to meet the needs of economic development in Saudi Arabia unless end-use energy efficiencies are significantly

Recommendations

With many seemingly more pressing matters occupying the country's leaders, such as economic reform, unemployment and a rapidly growing population, energy issues—particularly demand-side issues and end-use policies and regulations—may not have received the attention they deserve. Under these circumstances, it is crucial to adopt well-focused energy efficiency policies and regulations that are both effective and robust.

To make such policies, it is vital to provide the basic information needed.

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